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Northwest Natural Gas (NWN)
NYSE:NWN
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Northwest Gas
(NYSE:NWN)
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Rating:65Neutral
Price Target:
$57.00
▲(8.57% Upside)
Action:ReiteratedDate:03/02/26
The score is driven primarily by mixed financial fundamentals—stable utility profitability but rising leverage and consistently negative free cash flow—balanced by a strong, optimistic earnings outlook with clear multi-year growth initiatives. Technicals are supportive but show overbought conditions, and valuation appears fair with a solid dividend yield.
Positive Factors
Regulated profitability and steady margins
A regulated business model with steady operating margins (TTM net margin ~7.9%) provides predictable, rate‑based cash flows and earnings. That regulatory insulation supports multi‑month visibility into revenue and operating profit, helping sustain dividends and fund regulated investments.
Customer growth from acquisitions and organic gains
Material customer growth (10.9% y/y) driven by targeted Texas acquisitions and strong backlog at SiEnergy expands the rate base and revenue mix. Durable customer additions increase recurring cash flow, support future rate filings, and create cross‑sell and scale benefits over the next several quarters.
Large, constructive capex and regulatory support
A multiyear capex program and planned MX3 storage expansion underpin 6%–8% rate base growth, which typically translates into predictable regulated returns once approved. Constructive regulatory outcomes and targeted investments improve long‑term earnings visibility and support the company's growth outlook.
Negative Factors
Persistently negative free cash flow
Sustained negative free cash flow (TTM ~ -$198M) signals ongoing funding needs to support capital projects. Over a 2–6 month horizon this reduces liquidity flexibility, increases reliance on external financing, and constrains the ability to self‑fund growth or rapidly de‑lever if conditions tighten.
Rising leverage
Elevated and increasing leverage (debt/equity ~1.76) raises refinancing and interest‑rate sensitivity. Higher debt loads reduce financial flexibility, increase interest expense risk, and make the company more vulnerable to adverse rate or credit conditions over the medium term unless cash flow improves.
Flattening near‑term revenue growth
Momentum toward revenue expansion has stalled (TTM growth ~0%), indicating limited near‑term organic upside. With heavy capex and negative FCF, flattened revenue constrains margin expansion and makes the firm more dependent on acquisitions and regulatory rate actions to meet growth targets.
Northwest Gas (NWN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.18B
Dividend Yield4.18%
Average Volume (3M)297.06K
Price to Earnings (P/E)16.9
Beta (1Y)0.19
Revenue Growth11.27%
EPS Growth20.04%
CountryUS
Employees1,452
SectorUtilities
Sector Strength65
IndustryRegulated Gas
Share Statistics
EPS (TTM)1.39
Shares Outstanding41,563,847
10 Day Avg. Volume329,018
30 Day Avg. Volume297,055
Financial Highlights & Ratios
PEG Ratio0.46
Price to Book (P/B)1.29
Price to Sales (P/S)1.48
P/FCF Ratio-9.66
Enterprise Value/Market Cap2.24
Enterprise Value/Revenue3.80
Enterprise Value/Gross Profit9.67
Enterprise Value/Ebitda10.60
Forecast
1Y Price Target
$53.00Price Target Upside0.95% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)3.05
Revenue Forecast (FY)$1.47B
Northwest Gas Business Overview & Revenue Model
Company DescriptionNorthwest Natural Holding Company, through its subsidiary, Northwest Natural Gas Company, provides regulated natural gas distribution services to residential, commercial, industrial, and transportation customers in Oregon and Southwest Washington. The company also operates 5.7 billion cubic feet of the Mist gas storage facility contracted to other utilities and third-party marketers; offers natural gas asset management services; and operates an appliance retail center. In addition, it engages in the gas storage, water, non-regulated renewable natural gas, and other investments and activities. The company provides natural gas service through approximately 786,000 meters in Oregon and southwest Washington; and water services to a total of approximately 80,000 people through approximately 33,000 water and wastewater connections in the Pacific Northwest and Texas. Northwest Natural Holding Company was founded in 1859 and is headquartered in Portland, Oregon.
How the Company Makes MoneyNorthwest Gas generates revenue primarily through the sale and distribution of natural gas to its customers. The majority of its income comes from regulated utility operations, which allows the company to charge rates approved by state regulatory bodies. NWN also earns revenue from infrastructure investments, such as pipeline expansions and upgrades, which enhance its distribution network. Additionally, the company may have revenue streams from ancillary services, including energy efficiency programs and maintenance services. Partnerships with local governments and energy efficiency organizations further contribute to NWN's earnings by facilitating community programs that promote natural gas usage and conservation.
Northwest Gas Key Performance Indicators (KPIs)
Any
Operating Income by Segment
Shows profitability across different business areas, highlighting which segments drive earnings and where there might be challenges or opportunities.
Shows profitability across different business areas, highlighting which segments drive earnings and where there might be challenges or opportunities.
Data provided by:
The Fly
The FlyNorthwest Gas Earnings Call Summary
Earnings Call Date:Feb 27, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 06, 2026
Earnings Call Sentiment Positive
The call conveyed strong positive momentum driven by record adjusted EPS (+25.8% YoY), robust cash flow (+35% YoY), successful integration and rapid growth at SiEnergy, outperformance in the Water segment, a large long-term capex plan and a promising MX3 storage project that could meaningfully increase long-term EPS growth. Notable challenges include higher operating and interest costs, remaining permitting and execution risk for MX3, a mid-2025 housing slowdown in Texas, and some reliance on debt/equity issuance for funding. On balance, the positive operational and financial developments and clear growth initiatives outweigh the identifiable headwinds.Q4-2025 Updates
Positive Updates
Record Adjusted EPS and Strong Year-over-Year Growth
Reported record adjusted earnings per share of $2.93 for 2025 versus $2.33 in 2024, an increase of approximately 25.8%, driven by new Oregon rates, rate base growth and organic customer additions.
Robust Operating Cash Flow and Record Capital Investment
Generated approximately $270 million in cash provided by operating activities in 2025, about 35% above 2024, and invested a record $467 million in system capital (safety, reliability and technology).
MX3 Gas Storage Expansion — High-Value Growth Project
Announced MX3 storage expansion adding 4–5 Bcf capacity, estimated cost ~$300 million, expected in service by end of 2029, with signed 25-year customer contracts, FERC regulation, fixed 12.5% ROE and 50% equity layer; project could raise long-term EPS growth target from 4%–6% to 5%–7% once notice to proceed is achieved (target NTP by end of 2027).
SiEnergy (Texas) Rapid Organic Growth and Backlog Expansion
SiEnergy delivered 18% organic customer growth in 2025, contributed ~11% of consolidated adjusted EPS, and increased customer backlog to nearly 250,000 future meters (over 30% backlog growth year-over-year); management expects 15%–20% annual customer growth through 2030 and SiEnergy to contribute 10%–15% of consolidated EPS in 2026.
Water Segment Outperformance and Scale
Northwest Natural Water contributed $0.35 per share (12% of consolidated adjusted EPS) in 2025, above expectations, with water EPS up $0.21; company expects 2%–3% organic customer growth through 2030 and 10%–15% of consolidated EPS contribution in 2026.
Rate Case Progress and Customer Affordability Focus
Settled Oregon rate case with new rates effective Oct 31, 2025; reached settlement in principle in Washington; filed an alternative rate mechanism in Oregon expected to produce a modest 1.5% customer rate increase effective Oct 31, 2026, while pursuing multiyear rate-case frameworks to increase predictability.
Capital Plan and Long-Term Growth Reaffirmed
Reaffirmed long-term EPS compound annual growth target of 4%–6% (5%–7% with MX3) and disclosed planned capex of $2.6 billion–$2.9 billion through 2030; 2026 consolidated CapEx guidance of $500 million–$550 million and expected consolidated rate base growth of 6%–8%.
Shareholder Returns and Strong Liquidity
Maintained 70th consecutive year of dividend growth; targeting a long-term dividend payout ratio of 55%–65% and expecting accelerated dividend growth. Ended 2025 with liquidity of approximately $590 million and significant credit availability.
Negative Updates
Higher Operating & Depreciation Costs at Gas Utility
Northwest Natural Gas utility saw adjusted EPS improvement of $0.45 primarily from Oregon rates but was partially offset by higher operations & maintenance and depreciation expense, indicating cost pressures in utility operations.
Increased Holding Company Interest Expense and Other Segment Loss
Adjusted net loss in the 'other' segment widened by $0.39 per share year-over-year, primarily due to higher interest expense at the holding company, negatively impacting consolidated results.
MX3 Not Yet Included in Guidance and Remaining Permitting/Execution Risk
MX3 is not included in current guidance; remaining items before notice to proceed include finalizing EPC contracts and obtaining local permits — introducing timing and execution risk for the project and its prospective earnings uplift.
ATM Equity Proceeds Below Expectations; Financing Requirements
Cash from financing included $47 million of equity via ATM, which was less than expected; company plans incremental net long-term debt of ~ $150 million in 2026 and anticipates issuing $40M–$50M of equity via ATM, highlighting reliance on debt/equity issuance to fund growth.
Short-Term Housing Slowdown in Texas
Management noted a slowdown in new housing starts and completions around mid-2025 in Texas, which could temper near-term SiEnergy growth despite strong backlog; rebound from mortgage-rate moderation remains uncertain in early 2026.
Regulatory & Forecast Assumptions Carry Risk
2026 guidance and long-term targets assume average weather, continued customer growth, and no significant regulatory changes; changes in weather patterns, regulations or rate case outcomes could adversely affect results.
Company Guidance
Management's 2026 guidance calls for adjusted EPS of $2.95–$3.15 and reaffirms long‑term EPS growth of 4%–6% (compounded from 2025's $2.93), with the MX3 Mist storage project (not in current guidance) able to lift that to 5%–7% once notice to proceed; they expect consolidated organic customer growth of 2%–3%, consolidated rate base growth of 6%–8%, SiEnergy to grow customers 15%–20% (and to contribute ~10%–15% of consolidated EPS in 2026), Northwest Natural Water to grow customers 2%–3% (and to contribute ~10%–15% of EPS in 2026), with SiEnergy + Water together ~25% of consolidated earnings in 2026; consolidated CapEx is targeted at ~$500–$550M for 2026 and $2.6–$2.9B through 2030 (≈65% NW Natural Gas / 25% SiEnergy / 10% Water); MX3 would add 4–5 Bcf at an estimated cost of ~$300M (in service by end of 2029) under 25‑year contracts with a fixed 12.5% ROE and 50% equity layer; financing for 2026 assumes ~ $150M incremental net long‑term debt (after ~$160M maturities) and $40–$50M of ATM equity, continued strong cash flow, and a targeted dividend payout ratio of 55%–65% — all based on assumptions of continued customer growth, average weather and no material regulatory or legal changes.Northwest Gas Financial Statement Overview
Summary
Profitability is steady for a regulated utility (TTM net margin ~7.9%) and operating cash flow improved versus 2024, but near-term revenue growth is flat and financial flexibility is constrained by structurally negative free cash flow (TTM about -$198M). Leverage has also increased (TTM debt-to-equity ~1.76), raising funding sensitivity.Income Statement
Revenue has expanded materially since 2020, and profitability is steady for a regulated utility profile, with TTM (Trailing-Twelve-Months) net margin around 7.9% and solid operating profitability. That said, growth has cooled recently (TTM revenue growth at 0% after a down year in 2024), and net income is not consistently trending upward versus 2023, indicating a more muted near-term earnings trajectory.72
Positive
Balance Sheet
The balance sheet shows meaningful leverage typical of the sector, but it has moved higher recently: TTM (Trailing-Twelve-Months) debt-to-equity is ~1.76 versus ~1.36–1.43 in 2022–2024. Equity has grown over time and returns on equity are steady but moderate (TTM ~7.0%), leaving the company somewhat more exposed to refinancing and rate/financing conditions than in prior years.60
Neutral
Cash Flow
Operating cash flow is positive and improved versus 2024, but it remains low relative to debt (TTM operating cash flow is ~33% of total debt). Free cash flow is consistently negative across the entire period, including TTM (Trailing-Twelve-Months) at about -$198M, which suggests ongoing funding needs (likely capex-heavy) and reduces financial flexibility despite reported free-cash-flow growth off a negative base.44
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.29B | 1.15B | 1.20B | 1.04B | 860.40M |
| Gross Profit | 510.06M | 397.61M | 423.87M | 341.23M | 329.12M |
| EBITDA | 470.56M | 348.09M | 344.49M | 303.37M | 264.09M |
| Net Income | 113.32M | 78.87M | 93.87M | 86.30M | 78.67M |
Balance Sheet | |||||
| Total Assets | 6.24B | 5.23B | 4.87B | 4.75B | 4.06B |
| Cash, Cash Equivalents and Short-Term Investments | 41.08M | 38.49M | 32.92M | 29.27M | 18.56M |
| Total Debt | 2.76B | 1.96B | 1.75B | 1.68B | 1.52B |
| Total Liabilities | 4.76B | 3.85B | 3.58B | 3.57B | 3.13B |
| Stockholders Equity | 1.48B | 1.39B | 1.28B | 1.18B | 935.15M |
Cash Flow | |||||
| Free Cash Flow | -197.77M | -194.12M | -47.40M | -190.93M | -133.54M |
| Operating Cash Flow | 269.12M | 200.28M | 279.95M | 147.67M | 160.35M |
| Investing Cash Flow | -808.90M | -428.99M | -335.50M | -435.46M | -300.12M |
| Financing Cash Flow | 532.87M | 227.06M | 64.21M | 301.63M | 131.44M |
Northwest Gas Technical Analysis
Positive
52.50
Price Trends
47.66
Positive
46.91
Positive
43.54
Positive
Market Momentum
1.31
Negative
72.21
Negative
81.87
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NWN, the sentiment is Positive. The current price of 52.5 is above the 20-day moving average (MA) of 49.73, above the 50-day MA of 47.66, and above the 200-day MA of 43.54, indicating a bullish trend. The MACD of 1.31 indicates Negative momentum. The RSI at 72.21 is Negative, neither overbought nor oversold. The STOCH value of 81.87 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NWN.
Northwest Gas Risk Analysis
Northwest Gas disclosed 35 risk factors in its most recent earnings report. Northwest Gas reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Northwest Gas Peers Comparison
UnderperformOutperform
Sector (66)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $5.47B | 17.59 | 8.51% | 3.45% | 15.06% | 12.27% | |
70 Outperform | $6.42B | 21.17 | 4.76% | 3.07% | -23.15% | 157.45% | |
68 Neutral | $3.28B | 20.80 | 9.13% | 2.15% | 17.15% | 15.00% | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
65 Neutral | $2.18B | 16.85 | 7.92% | 4.18% | 11.27% | 20.04% | |
64 Neutral | $5.42B | 19.91 | 8.46% | 3.82% | -4.50% | 2.49% | |
61 Neutral | $3.01B | 103.12 | 0.45% | ― | ― | ― |
* Utilities Sector Average
NWN
Northwest Gas
52.53
12.69
31.85%
CPK
Chesapeake Utilities
137.66
13.74
11.09%
SR
Spire
91.98
18.33
24.89%
SWX
Southwest Gas
89.60
17.86
24.90%
OGS
ONE Gas
87.70
16.29
22.82%
CTRI
Centuri Holdings, Inc.
30.41
13.77
82.75%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.